Meeting customer needs 1.1 Flashcards
Definition of a mass market
Mass markets are aimed at the general population
Definition of a niche market
A niche market is a subset of the main market and addresses a specialist need.
2 advantages of mass market
Large volume of sales
Large scale production means economies of scale.
2 disadvantages of mass market
lots of competition
Products need to be differentiated through markets which can be expensive.
2 advantages of a niche market
The ability to charge a premium price
Small scale production means they are flexible to follow trends.
2 disadvantages of a niche market
Risky
Demand may not be constant
Higher unit costs so no economies of scale.
What is the definition of dynamic markets
A market that is subject to rapid and continuous changes. Companies have to predict any upcoming trends.
4 ways when examining dynamic markets
Online retailing
Product innovation
How markets change
Adapting to change
Pros of online retailing
Flexible and easy to set up, Can reach international markets- longer trading hours
Research can be conducted, eg identifying what items have been viewed the most
Cons of online retailing
My not be accessible to older people
Risk of fraud and viruses
It is competitive, so more expensive to stand out.
How do markets change
Change in demographics
Change in consumers preferences
Change in legislation
Competition
What is product innovation
Adapting/Improving existing products
What is market growth
Measurement of the change in the entire market
What is product orientation
This is when a business looks at the products or production process of a good - what the business is good at doing
Market orientation
This is when a businesses considers customers needs and wants
What is primary research. Provide examples
Collecting first-hand data, new data, specific to the needs of the business.
Focus groups, surveys + questionnaires, observations, interviews, test marketing
What is secondary research. Provide examples
Gathering data that already exists - third parties
Trade publications, market reports, google, internal transactional data.
Benefits of primary research
Detailed insights, privately kept and focused on research objectives
Drawbacks of primary research
Time consuming and costly, risk of survey bias
Drawbacks of secondary research
Quickly become out of date therefore useless, No tailored to business needs.
Definition of Quantitative
Statistical and based upon data of large samples
Definition of Qualitative
Beliefs, attitudes and intentions
Benefits of quantitative data
Easy to analyse, numerical data provides insights into trends, compared with other data sources
Drawbacks of quantitative data
Lacks reliability, no explanation on numerical data and doesn’t focus on expectations
Benefits of qualitative data
Gives a clear insight to consumer needs and wants, important for new product developments and launches
Drawbacks of qualitative data
Based on opinions so risky that it is not representative, expensive to collect and to analyse.
Define market segmentation
The process of dividing potential customers into different groups based on demographic such as: age, gender, income.
Importance of market segmentation
Choosing marketing mix, choosing promotion and market mapping.
Benefits of market segmentation
Better matching to consumer needs and wants, enhanced profits, opportunities for growth.
Benefits of secondary research
Free and easy to obtain
Good source of market insights
What is market mapping?
Illustrating the range of positions that a product can take in a market bases on two dimensions that are important to customers.
Give 4 examples of dimensions for market mapping:
Low price vs high price Low volume vs high volume Unhealthy vs healthy Necessary vs complex Low tech vs High tech
Advantages for market mapping.
Helps spots gaps in the market
Analysing competitors and where they are positioned within the market
Encourages use of market research
Disadvantages for market mapping
A gap in the market doesn’t mean there is demand for the product
No guarantee for success
How reliable is the market research?
What is meant by adding value?
The difference between the price of the finished service. This is where value is added.
How can you add value?
Build brand.
Deliver excellent customer service
Add product features and benefits that customers want
Operate efficiently.
Benefits of adding value
You can charge a higher price
Differentiation between competitors
Firms can increase sales volume- Greater economies of scale can lower unit costs to maximise revenue
